STEPHEN McDONELL, REPORTER: If you have ambitions to live in a luxurious inner-city penthouse, these days there are plenty of experts ready to tell you just how it can be done.

MAN ON ADVERTISEMENT: I did Danny and Paul's property workshop and thought I'd make my first million in six months. Should've known better. It took me a year. You were right, guys. Being a property millionaire sucks.

STEPHEN MCDONELL: And many Australians believe enough, are insecure enough or greedy enough to pay for a big lesson in property wealth.

MAN ON ADVERTISEMENT: A strategy that, once applied, will not only have you achieving millionaire status in under five years, but a strategy that will also produce cash flow to support your millionaire lifestyle.

TERRY RYDER, PROPERTY WRITER: This has created this property investment fervour that's happening out there for the last couple of years because the ordained method of creating wealth in this country is through real estate investment.

STEPHEN MCDONELL: Tonight on Four Corners, the great real estate obsession and the clever talkers who know there are millions to be made in telling tall stories. Over the last 10 years Australia's cities have exploded with residential housing developments. There's been an unrivalled property boom and it keeps coming, despite fears of an oversupply. Last year, more than 22,000 new units were built in NSW alone. In Melbourne, 100,000 new apartments will come onto the market in the next four years. 70% of these units are being sold not to people who want to live in them, but to investors - investors who've approached the exercise in something of a frenzy. Ordinary people are going way into debt to try and buy investment property for the first time. What's prompting so many of them, and why now?

ANNOUNCER: Ladies and gentlemen, welcome to an evening with Danny and Paul Hanna, the two Australian property gurus that have shared their unique investment strategy with thousands worldwide. It's a strategy that has enabled them to acquire and trade hundreds of properties valued in the tens of millions of dollars, and a strategy that's now got them developing more than $60 million worth of property development projects in Sydney alone. Ladies and gentlemen, it's time to fasten your seatbelts as you're about to begin your journey to unlimited wealth. Please welcome Danny and Paul Hanna.

STEPHEN MCDONELL: The Hanna cousins run real estate investment seminars to packed rooms. There are now dozens of property gurus like them, and Australians are pouring in to hear the secrets of their success.

DANNY HANNA: Well, good evening.

AUDIENCE: Good evening.

DANNY HANNA: Let's try that one more time. Good evening.

AUDIENCE: Good evening!

DANNY HANNA: Good evening, ladies and gentlemen. I'm Danny Hanna, that's Paul Hanna. And firstly, just on behalf of Morgan Pacific, I'd like to extend my sincerest thank you for coming along and investing the next 3.5 hours or so with us here tonight. And I think that as tonight's seminar progresses, you'll begin to realise why, that just by attending, just by taking the time to be here tonight, that you're probably already ahead of the vast majority of Australians who never take the time to stop and truly work on their financial futures.

STEPHEN MCDONELL: Paul Hanna says he grew up in a housing commission flat in Sydney's Redfern - stuck there because his father was afraid to go into debt.

PAUL HANNA: And unfortunately in our travels, we see a lot of people come across that same scenario, who say, "Well, I just can't get any more loans," and they give up. We're saying you need to think creatively to get beyond that.

DANNY HANNA: I wanted to show people how to create the investment opportunity and I found that through property development. That was my vehicle. Bill Gates uses software. I use property development.

STEPHEN MCDONELL: At these sorts of seminars people are encouraged to become joint venture partners, even to become developers. They're told to buy units off the plan to try and get a discount and they're encouraged to making purchases using deposit bonds. With these bonds you can delay paying even the deposit until settlement. Some gurus encourage people to buy multiple properties this way and on-sell at a profit before they're required to settle.

NEIL JENMAN, REAL ESTATE CRITIC: The theory behind deposit bonds is that it doesn't matter how many properties you buy because real estate's so wonderful and real estate will always go up. So consequently, even if you can't afford it right now, you'll be able to sell them before you have to settle.

DANNY HANNA: Could I get you just to raise your hands? Everybody, raise your hands and look around, because when I ask the question "Who here could buy $1-million-worth of property tomorrow?" - that's how many of you can do it. Understand it's not the banks that are stopping you. It does require us to be a little bit more creative.

STEPHEN MCDONELL: The main message - you don't need any savings at all to become a millionaire like the Hanna boys.

When you say to people, you know, "You can invest in real estate with none of your own money," is that correct?

PAUL HANNA: I suppose we laugh because that's basically how we started. Um, you know, you can do it.

DANNY HANNA: There's probably several different ways that you can do it.

PAUL HANNA: It's just a matter of finding the means. You've got people that could become your partners when you start, uh, property owners, etc, all sorts of means that you can get started.

DANNY HANNA (To audience at seminar): There's that temptation to run back to your family and your friends and get excited and say, "I'll do this and I'll do that," and I want to caution you because sometimes they're the people that hold us back. "Oh, that stuff doesn't work," or "You're chasing a dream that'll never happen." I know they're not trying to harm us, are they? They're just trying to...well, protect us from ourselves, if you like. But Paul and I are here, ladies and gentlemen, to tell you that dreams absolutely do come true.

STEPHEN McDONELL: If making so much money out of real estate is so easy, people could ask you, "Why are you bothering to do these seminars?" I mean, why don't you just spend your time implementing your own strategies?

DANNY HANNA: I know my answer to that.

PAUL HANNA: I know mine, and it's a question we get a lot. We do enjoy going out there and being able to teach people, get up there in front of a large audience and get feedback that people have actually appreciated it.

DANNY HANNA: It's the ego, that's what it is.

PAUL HANNA: It's a good feeling to be able to do that and where people say, "That was great."

STEPHEN MCDONELL: And it's especially great for the Hannas if people move on to their next stage.

DANNY HANNA: You see, the wealth matrix workshop takes you through a journey. It takes you through the journey that Paul and I travelled as we went from zero dollars to...well, wherever we are at the moment.

STEPHEN MCDONELL: A thousand people paid around $60 each to attend this seminar. If these people sign up for the four-day series of lectures, it will cost around $5,000.

DANNY HANNA: Total investment you have there is $4,997. We also have a special partner rate of $2,997 because we encourage people to go along together. If you can learn just one strategy that will save you $5,000 on your next property acquisition, then it pays for itself over and over again. This may sound trite, but you cannot afford not to experience this four-day workshop. I hope you got everything you wanted from tonight's seminar. I hope you make the decision to join us. There'll be people outside on the registration desks. We have a special competition for people registering tonight. Read about it in your materials. Please drive safely this evening, and goodnight.

PAUL HANNA: Thank you.

DANNY HANNA: Thank you.

MAN: We did invest in property before, and we didn't make a very good success of it at all, and we just wanted to learn how to do on the winning way - you know, the strategy of it...

WOMAN: Yeah. Wondering where we've gone wrong.

MAN: Where we've gone wrong, so we can apply it to make it work for the next time, you know?

STEPEHN McDONELL: What did you think of tonight?

MAN: We thought it was terrific.

WOMAN: Very informative.

MAN: Very informative.

WOMAN: Yes.

MAN: It's the only property sort of development strategies we've ever heard that works - well, seems to work, anyway...

WOMAN: We know the basics.

MAN: We're going to go to a future one, go to a workshop. We've lost money, yes, on real estate before. But, uh, but we were in the wrong market too, and in the wrong area.

STEPHEN McDONELL: It hasn't put you off, that you've lost money?

MAN: No! No!

WOMAN: No! Definitely not.

MAN 2: I suppose financial independence - that's what it's all about. Having to maybe not work, um, you know, for the rest of my life.

STEPHEN McDONELL: Will you be signing up tonight for the next stage?

MAN 3: Yeah. Once I talk to my wife, I probably will. I'll go home and give her a big... (Laughs) ..have a big discussion... I probably will. I'll phone the guys up later about getting into it, but she'll go for it - normally does.

STEPHEN McDONELL: Drawing on introductory nights like this, the Hanna boys get around 400 people at a time to do their $5,000-, four-day course, pulling in $2 million per seminar. Others are charging much more - $15,000, $20,000 and even $50,000 for real estate advice - and people are paying it. Real estate seminars have drawn so many people in that now we even have the phenomenon of the antiseminar seminar. Neil Jenman, the self-styled ethical real estate agent crisscrosses the country every week attacking the gurus. It's a case of duelling seminars.

NEIL JENMAN (To audience at seminar): Why not have cooling-off periods? If the real estate industry says everything is so wonderful and systems are all so ethical, then why are they worried that somebody's going to cool off?

DANNY HANNA: There's eight or nine different ways to buy property no-money-down. We cover them in our weekend workshop.

NEIL JENMAN: People talking to you about - "It's not going to cost you money," "There's no money down," - I can tell you people go broke. They lose on no-money-down deals. I want you to picture it like this. If your home's worth $500,000, you owe $200,000 - you've got $300,000 equity. It's like they stick a vacuum cleaner in and suck out the equity in your home without you even realising it.

DANNY HANNA: The strategy I'm about to show you - a real-life example - will turn $7,900 of your money - or it could be somebody else's money, and we'll show you how to do that later on - and turn that into $125,000 net profit. Who'd like to learn how to do something like that? Especially if it only takes three months.

NEIL JENMAN: It's not possible to get rich quick in the space of time that they're talking about, and do it without cheating or ripping somebody off. You cannot get rich quick. You can go broke quick.

DANNY HANNA: Property prices are going up billions and billions of dollars all around us! And you know what? The property doesn't care who owns it. The property doesn't care who owns it.

NEIL JENMAN: Here's another clue for you. They're advertising Brisbane CBD apartments in Melbourne and Sydney. If they could sell them in Brisbane, why are they trying to sell them in Melbourne and Sydney?

STEPHEN McDONELL: Some real estate seminars also offer to source property for you. In fact, this seems to be often the real point of the exercise. Profits from property sales can be even higher for the gurus than from the seminars. They can make fast money by selling overpriced properties. This is known as marketeering. A year and a half ago, Shirley Taylor had a sick father and two daughters, one with Down syndrome who needed to be cared for. Along with her husband, she felt she had to invest their savings to look after the family in the future.

SHIRLEY TAYLOR: My father was in a nursing home and requiring quality care. I've also got ongoing and future expenses for my daughter with a disability so my investment needed to be a good one.

STEPHEN McDONELL: She saw an ad for a seminar sponsored by First National Real Estate, a respected real estate agent. When she got there, it was a company called the Investment Institute that gave the seminar.

STEPHEN McDONELL: After the first free night, Shirley Taylor signed up for and attended the next stage - the $4,700-, four-day course. Shirley Taylor told the presenter of the course, Jon McKenney, she had money to invest. McKenney is now serving a three-year jail term for dishonest and improper behaviour in another property investment company.

SHIRLEY TAYLOR: During the tea break on the first morning, and this was just about an hour and a half into the course, the course presenter told me about some properties they had managed to get 10% off - and that was to the tune of $55,000 or more - on some apartments in the city because they could bulk-sell for the vendor.

STEPHEN McDONELL: What did you think of this?

SHIRLEY TAYLOR: I...I was really intrigued because, um...I thought, "Gee, that's a pretty quick way of making a profit." And if we keep doing that, we couldn't lose if they are doing the buying and sourcing for us.

STEPHEN McDONELL: The next day it was the head of the Investment Institute, Paul Murphy, who greeted Shirley Taylor and her husband when they went to see one of the properties on offer. Paul Murphy not only runs the seminar business but offers financial advice and also markets real estate. Investors tend to get involved with Mr Murphy in all three capacities.

SHIRLEY TAYLOR: He said he was a financial planner with 17 years experience and 5,000 clients!

STEPHEN McDONELL: Hobsonview was shown to the Taylors by Paul Murphy and a salesman from the developer Westpoint Corporation. The Taylors were told that the Port Melbourne apartment was an absolute bargain because Paul Murphy got the units from the developer for a discount.

SHIRLEY TAYLOR: They had told us on day two, "This won't last! "You've got to get in there quick "because there's lots of investors out there waiting!" So we felt that in order to be able to buy the property, we had to go immediately. We were told ASAP.

STEPHEN McDONELL: They were shown a valuation for their would-be unit at $630,000. Paul Murphy offered to sell it to them for $570,000, a $60,000 discount. But time was running out, they were told. They went ahead and signed for it. Soon after signing the contract, Shirley Taylor got suspicious and commissioned her own valuation, which came in at $515,000.

SHIRLEY TAYLOR: These are the notes I took when the lawyer rang.

STEPHEN McDONELL: The Taylors had been exposed to one of marketeering's common practices when Collins Street law firm McDonald & Associates telephoned out of the blue.

SHIRLEY TAYLOR: I asked this person how she got to know about me because I hadn't engaged a lawyer. She said, "Oh, we've been given your contact details "by the Investment Institute "and we actually have seen the contract."

STEPHEN McDONELL: Simone Campbell, a partner at McDonald & Associates, became the Taylors' lawyer. She advised them to go ahead with the purchase, despite their concerns. The Taylors were unaware that Simone Campbell gave lectures for Paul Murphy's Investment Institute and wrote a section of his four-day property course. Ms Campbell refused to speak to us.

NEIL JENMAN: She used a lawyer recommended by the person selling her the property, which is a trap so many people fall into.

STEPHEN McDONELL: How do you feel now about this whole deal, Shirley?

SHIRLEY TAYLOR: Now I feel like a sucker, but at the time I had a winning feeling because they made me feel like it was an investment that only the privileged could access.

STEPHEN McDONELL: Paul Murphy maintains that Shirley's unit is today worth at least what she paid for it, and says he has a bank valuation to show that. He refused to be interviewed for this program. Meanwhile in Melbourne, the frenzy of home unit construction goes on like never before. Marketeers have been operating across Australia but Melbourne is the new hub. From here, they've fed the property boom artificially and marketeered investors are starting to lose money. Property writer Terry Ryder says what's worse is that many thousands of people won't realise for some time that they've been stung.

TERRY RYDER: I think Melbourne's got a serious oversupply of apartments already. We've seen investors who bought off the plan two or three years ago reselling at substantial losses. This is despite the fact they are reselling into one of the biggest booms Australian real estate has ever seen.

STEPHEN MCDONELL: How much worse could it get?

TERRY RYDER: I think a lot worse. Right now, we're seeing a lot of new construction. This construction is happening because people have already bought off the plan to enable those projects to go ahead. A couple of years down the track, they'll be selling into a downturn. They'll be taking even bigger losses.

STEPHEN McDONELL: And the governor of the Reserve Bank agrees.

IAN McFARLANE, RESERVE BANK GOVERNOR: The other development that has clearly increased risk is the exceptionally fast increase in borrowing - for residential property, for investment purposes, and the accompanying rapid expansion in apartment building which show all the signs of a seriously overextended market.

STEPHEN MCDONELL: The recent wave of marketeerings started 10 years ago in Queensland and, above all, on the Gold Coast. There, the marketeers realised that the best people to sting were not locals. They looked interstate for people who didn't know what Queensland property was worth and would be seduced by the glitter of the Sunshine State. This was the beginning of a special strategy within marketeering, known as two-tier marketing. The two-tier market has one price for locals and another for blow-in suckers.

MAN: How much have you lost on each property?

WOMAN: A lot. I'd say altogether over $200,000.

MAN: $200,000 all up?

WOMAN: Yeah, sure.

STEPHEN McDONELL: These Victorians feel they've been had in Queensland, like thousands more. Theirs is one of several class actions forming against those responsible.

WOMAN: We got a call one day from a company that were doing investment seminars.

WOMAN 2: They kept ringing us, and eventually sent somebody to our home, to extol the virtues of their investment properties.

MAN: The sales seminar was excellent. You know, it was an excellent sales pitch. It looked good, everything. And I was impressed with an ex-AFL footballer coming to our house and selling the whole principle and the scheme of it. That got me in.

WOMAN 3: I went to a seminar and they arranged to fly me up and look at some properties up there with a view to investing in a unit.

STEPHEN McDONELL: This was crucial. Fly them in, drive them around, and sign them up fast. Meet them at the airport, no time alone, no time to stop and think, one day to do it, once-in-a-lifetime opportunity.

WOMAN 2: They gave us a discount - a heavily discounted fare and accommodation in Queensland to go up for a couple of days and view the properties that they had available for sale.

MAN 2: They sold the glitter - you know, the Gold Coast, Queensland, everybody coming to live in Queensland.

STEPHEN McDONELL: The investors were not just taking the word of marketeers. They were not only shown houses and apartments, but written valuations by supposedly reputable valuers.

WOMAN 3: I guess you'd say we were wooed. We were really, truly wooed.

MAN 3: We'd been taken to a very swish office where a guy had been on a computer, showing us figures, giving us estimates of values, estimates of future rental.

WOMAN 3: Really, they just wouldn't let me out of the room until I signed up.

WOMAN 4: They also had this beeper on the real estate agent's belt that was going off every sort of 10, 15 minutes. And she said, "Every time that buzzer goes off, "we've made a sale. "And because this is the only property in your price range, "if you don't buy soon, this beeper will go off and you will miss out."

STEPHEN McDONELL: After seeing the properties, they were taken to visit financial consultants, solicitors and even banks.

MAN 4: I think that the financial consultant that we saw, I think that the solicitor that we saw, and I'm sure the banks knew - all knew that what they were doing was selling at an inflated price. Uh, they were all local.

MAN 3: We thought we were talking to an independent financial advisor, we thought we were talking to an independent solicitor.

STEPHEN McDONELL: Most of the properties sold this way have not been in prime locations, but in the back blocks of the Gold Coast. Promised rental returns have not been forthcoming. Many can't even get renters. Investors who've tried to sell have now found their properties are worth tens of thousands of dollars less than they paid for them years ago.

MAN 5: The last five years have been extremely worrying. I have to find $2,500 a month to service the properties. I can't afford to sell them.

MAN 6: We lost a total of about $65,000 on the deal. And that's after five years and we were told that we were supposed to make up to around $250,000 on it, in that five years, but it never happened.

MAN 5: Everybody involved must have known that we were being screwed, that I was putting up my property as collateral and that I could lose that. Uh, they... They were... They didn't care.

WOMAN 6: What was supposed to have been our nest egg for our retirement, old age, became an anchor around our necks.

WOMAN 1: You know, we're not rich. We work really hard. And it hurts to lose that amount of money. It might not be a lot to someone else, but it's a lot to us.

MAN: How are you going?

JOURNALIST: Anything to say to the thousands of people you've ripped off?

DUDLEY QUINLIVAN: I have a lot to say, but can't talk now. I'm heading into an appointment.

STEPHEN McDONELL: This multibillion-dollar property scam was run by Dudley Quinlivan, described by the Queensland Fair Trading Minister in Parliament as 'King Con', and his business partner, Chris B_________, who's said to have been the original mastermind.

TERRY RYDER: There were 3,000 investors on the Gold Coast alone, people buying Gold Coast real estate, who paid on average $50,000-$60,000 too much. That's in one year.

STEPHEN McDONELL: Chris B_________ and Quinlivan ran an elaborate operation. Using hundreds of workers, they led people all the way from interstate seminars to sign on the bottom line in Queensland.

NEIL JENMAN: Everybody is in on it except the unsuspecting consumer. Everybody - from the salesperson that goes out to their home to do the consultation, to the man presenting the seminar, to the travel company, even, that gets them up there, to the solicitor that they go and see, to the bank - the bank managers coming in, in jeans, on the weekend to sign them up.

STEPHEN McDONELL: Investors were taken to see Gold Coast solicitor Don Dickie to sign their contracts. Don Dickie was giving advice to both marketeer Dudley Quinlivan and his customers. An ex-employee of Mr Dickie says her orders really came from Dudley Quinlivan's company, Australian Financial Management Corporation. So what proportion of your business was coming from Mr Quinlivan's organisation?

CHRISTINE MAHER: Well, the work that I did, uh, 100%.

STEPHEN McDONELL: Everything? Everything was coming from the Quinlivan organisation?

CHRISTINE MAHER: Yes...yes. That kept, basically, two of us employed. I just thought it was very strange that, basically, the boss in our office wasn't really the boss. That, basically, we were answering to what was AFMC - Australian Financial Management Corporation. I couldn't get my head around that.

STEPHEN McDONELL: Ms Maher says one Melbourne woman got her own valuation done on the property she was going to buy.

CHRISTINE MAHER: She rang me up and said it was about $30,000 less than what the valuation they'd provided her with. I went and saw the boss and said, "It's a bit of a concern. I don't think this lady wants to go ahead with her contract. She's got a valuation done on it that's $30,000 below what it's worth." And basically, he just said, "Well, you know, in 30 years time, it's going to be worth a lot more than what she's paying now."

STEPHEN McDONELL: "So don't worry about it"?

CHRISTINE MAHER: Yeah.

STEPHEN McDONELL: Don Dickie refused to speak to Four Corners. He's one of many solicitors involved, a number of whom are being investigated by the Queensland Law Society.

MAN: You would not have been able to buy these properties without the banks' involvement.

STEPHEN McDONELL: But the victims are most angry with the banks. They even opened on the weekend especially to do business with interstate investors.

WOMAN: I guess we just didn't think that we were being conned because we thought, "Well, if the bank's going to approve, um, this loan, "then it must be alright."

MAN: They'd approved the loan by Tuesday.

STEPHEN McDONELL: There are wide-ranging allegations against the banks. Some didn't even do their own valuations. Others obtained valuations showing the investors were paying too much, yet the banks didn't tell them.

What do you think about the role of the bank in all this?

WOMAN: It wouldn't be polite to say it on camera.

STEPHEN McDONELL: The involvement of banks goes back a long way. In October 1993, the Gold Coast sales manager for Metway Bank - now Suncorp Metway - told a conference about his bank's role in two-tier marketing. He defined it as property with prices above fair market value, sold predominantly interstate, overseas or outside the local area. The ANZ, through lending division Origin, gave loans without doing valuations. Westpac and its subsidiary, the Bank of Melbourne, did valuations, and Four Corners has obtained several of them. Westpac was told things like, "The purchase price is excessive and cannot be supported by sales evidence." Yet the bank went ahead and gave loan after loan. The ACCC is taking the Commonwealth Bank to court for alleged misleading and deceptive conduct in two-tier marketing. The Commonwealth Bank is defending the action. The bank was told in a valuation that "selling costs are often excessive, are passed on to the purchaser and cannot be recouped upon further resale."

TERRY RYDER: So they're selling primarily to investors, which means they have the borrower's own house as collateral as well as the property they're buying. They're paying too much for the property, but the bank's protected because they've got their house to fall back on and they're willing to take someone's house if it comes to that. You could stop it all dead very, very simply by making it law that the banks, A, have to do a valuation and, B, they have to show that valuation to their client.

MAN: I mean, we still owe the Bank of Melbourne $194,000. So, we're getting old - I'm in my 50s now - and I can't see me paying that off before I retire at 80 years old. So, yeah, we're in big...big trouble.

STEPHEN McDONELL: Dudley Quinlivan refused to be interviewed for the program and has moved into New Zealand. Chris B_________ also refused to be interviewed. He recently sold one of his marketing companies, including the staff, to a developer in Melbourne.

STEPHEN McDONELL: And if Victoria is the centre of the new marketeering kingdom, one of its own has become the king. He's a 33-year-old Belarusian immigrant with a background in computer sales. His name is Henry Kaye and his empire includes a magazine and hundreds of millions of dollars in property development. Then there are the seminars. Henry Kaye says almost 100,000 Australians have attended.

HENRY KAYE: But people say, "It takes time." No, it doesn't. It takes knowledge. And knowledge can be given to you by someone else instantaneously. Do you guys agree with that?

TERRY RYDER: He is, justifiably, the most notorious of the get-rich-quick set. Um, I think he has refined the art of inducing people to pay large sums of money for bad advice, to a level that no-one else has quite managed in Australia.

HENRY KAYE: See, with property investment, you can be an absolute moron and you can still make money. Why? Because the market grows. Correct?

STEPHEN McDONELL: In their thousands, people pay Henry Kaye $15,000 for a four-day course. They pile into a hall, and usually it's no Henry Kaye in the flesh, just a video like this one - a minimalist one-man show. Then there's the advanced $20,000 course, and the $55,000 Platinum Club offering priority access to Henry Kaye properties.

HENRY KAYE: So we're going to learn right now the most advanced techniques I know of of how you can go and buy property at wholesale or how you can buy bulk property with no money or how you can take out whole projects. I'll be teaching you what I'm actually doing every day right now.

STEPHEN McDONELL: His seminar company, the National Investment Institute, churns through participants. It all works like an industrial production line, as insiders told Four Corners. Because he's a powerful player in the industry, they would only speak anonymously.

MAN 1: He's absolutely brilliant, but, um, he's in business purely for himself. And he will be as friendly and hospitable as he can be but, if he smells a dollar, my personal experience is he'll go for the jugular.

MAN 2: I was a consultant at Investmentsource. My job was to sign people up into his Investment Mastery program and also the Business Mastery program after a consultation which they would've had with a video screening of his 'Unlimited Wealth', uh, three-hour, I suppose, evening show.

STEPHEN McDONELL: What specifically did you say to people that you know now was not the truth?

MAN 1: I told people that if they incurred a debt of over $15,000 and did the course, that they will be able to buy properties and achieve financial freedom, and I know that that's not true at all.

STEPHEN McDONELL: Did you know that was a lie at the time, when you said that?

MAN 1: Part of me did and I think I was trying to hide it because I believe I was maybe doing good for the people.

MAN 2: You would be pushed to make people feel guilty about who they were or what they were or what they hadn't achieved, what their jobs were like, etc, and the psychology used was fairly crushing.

HENRY KAYE: If you don't believe this is going to happen, leave the seminar 'cause you'll never find a way. What's the use of doing anything?

STEPHEN McDONELL: Four Corners has obtained a copy of the training manual for Henry Kaye's sales staff. It's cold and efficient, going through a nine-stage face-to-face system to sign people up. It starts off with pretty standard "introduction, "build rapport, "and find needs." But then we hit stage four - "create pain".

MAN 2: "You're a loser - how will you get further "if you don't do something about it?" Or they might've used a phrase. Like, for example, "If you lost your job tomorrow, how much time would you survive without any money? What if your wife or husband were to go to hospital? Who would be earning the income?" Um, things like death were used. Pictures were painted of loved ones dying.

HENRY KAYE: Average people on average incomes can't do it. But is that why you came here? 'Cause if you want to be average again, leave.

STEPHEN McDONELL: Then we move on to 'Anti Sell'.

MAN 2: "You're not obviously good enough for this program," or "You're not able to do this program."

MAN 1: No confidentiality clause, no deal.

STEPHEN McDONELL: And then, 'Convince Me'.

MAN 2: "Lots of people want to do the program. If you're signing up, sign up now. Convince me that you should get onto the program."

STEPHEN McDONELL: This strategy has proved remarkably successful. Mr Kaye also arranges loans for poorer people to cover the $15,000 so they can do his course.

STEPHEN McDONELL: Some are said to make big money using Henry Kaye's methods. Mr Kaye wrote to Four Corners saying he has a 97% satisfaction rate. But Four Corners understands that the Victorian Education Department is looking into his company, the National Investment Institute. Others are questioning if ordinary investors are experienced enough or ruthless enough to implement his strategies.

MAN 1: The reality is, out of the 75,000 people odd who the company reckons went through, I would say less than 1% ever made any real money out of it.

STEPHEN McDONELL: Why is that?

MAN 1: Because they are... People are not able to go out there and buy entire developments of properties. They don't have the finances, they don't have the serviceability and they don't have the skill.

TERRY RYDER: For most of us, the strategies you've paid $15,000 to learn, you actually can't use because you're not a scoundrel.

HENRY KAYE: Include a charge clause in the leasing contract, so, if they default, you can go after all their other assets. You can liquidate their business if they don't pay the money. You just liquidate the business.

STEPHEN McDONELL: Do you think that Henry Kaye knows that these strategies will not work for most people?

MAN 1: Absolutely.

STEPHEN McDONELL: How do you know that? Has he said that to you?

MAN 1: He...it was openly acknowledged that, you know, while the majority of people would not be able to do it, the few would.

STEPHEN McDONELL: It was openly acknowledged within the company?

MAN 1: Within the company.

HENRY KAYE: The costs are massive to putting on these seminars. Right? Absolutely massive...

STEPHEN McDONELL: Henry Kaye's seminars also feed investors into his property sales company, the Property Consulting Group. As well as possibly spending $15,000 or more on the course, some of the seminar-goers then buy property, even paying a further $10,000 sourcing fee for the privilege. Mr Kaye told us in writing, he's had no formal complaints regarding the on-selling of his properties at a loss. But Four Corners has spoken to disgruntled Henry Kaye purchasers. Armed with independent valuations, they say the purchase prices have been inflated by up to 20%. Then there are those who say they have lost tens of thousands of dollars on resale. Henry Kaye says he's never sold properties to his clients at prices higher than independent valuations. But it's questionable how he achieves such valuations. He speaks about this in his home study kit.

HENRY KAYE: And if this valuer knows you, if they've got belief in you, if they know that you're knowledgeable, this valuer, in most cases, will value the property at a price you want instead of at the lowest possible price, which is what happens, right?

STEPHEN McDONELL: Henry Kaye also has a strategy which may be tipping people into hot water. It allows those with no savings to buy a unit. The key is to sell them an apartment with two prices - one for the buyer and a higher one for the bank. The investors inform the bank of the higher price. Later, Mr Kaye will give buyers a rebate to create the real price. The bank, thinking the inflated price is the real one, gives an 80% loan. But it's really a 100% loan. We spoke to several investors whose rebate has been kept secret from the bank.

CHRIS CONNOLLY, CONSUMER POLICY CENTRE, UNSW: I believe that consumers are breaking the law. They're certainly breaking their contractual agreement with the bank by participating in these rebate schemes. And, unfortunately, it's most likely that they will bear the brunt of any repercussions, rather than the property marketers and developers who remain unregulated.

STEPHEN McDONELL: Four Corners has documents from inside the Henry Kaye organisation showing complexes of units nearly all sold with secret rebates.

MAN 1: If it was a 5% deposit, the banks would organise $380,000 finance. If I was only buying a property at $360,000, I could land up buying a property which I couldn't afford and I would make $20,000...back in my pocket. So, if I didn't have any money, it would be a perfect example. And then Henry said, "We could use that $20,000 to pay off the course."

STEPHEN McDONELL: Do the banks know this is going on?

MAN 1: I don't think so.

(FOOTAGE OF STEPHEN McDONELL VISITING A STALL AT A SYDNEY PROPERTY EXPO)

STEPHEN McDONELL: Um, I've been trying to get an interview with Henry Kaye.

EXPO WOMAN 1: Henry Kaye?

STEPHEN McDONELL: We had some trouble asking Henry Kaye to explain his seminar, 'Property Development Empire'. So, we visited the stall one of his companies had at a Sydney property expo a week and a half ago.

I'm Stephen McDonell from the ABC, Four Corners. We've been chasing Henry Kaye for an interview. Just wondering if he was here today.

EXPO MAN: No, he's not here today. He's in Melbourne.

STEPHEN McDONELL: OK. We'd like to do an interview with him, especially about the rebate strategy that he advocates in which people seem to mislead the banks into getting a 100% loan to buy property from your company.

EXPO MAN: Right.

STEPHEN McDONELL: Are you aware of that strategy? The rebate strategy?

EXPO MAN: I'm aware of the rebate strategy, yeah.

STEPHEN McDONELL: What do you think the banks would think of that, if they found out that people weren't really paying the prices they've been told?

EXPO MAN: The banks DO know about it, though.

STEPHEN McDONELL: The banks know about it?

EXPO MAN: Yeah. We're settling a development at the moment where...

STEPHEN McDONELL: We've spoken to banks that deny they've been told about the rebates. The National Bank said to Four Corners that such rebates would have been done without its full knowledge. It said, if such rebates had been paid, the bank "would have been misled as to the actual...price of the property". It's currently investigating the matter. Henry Kaye wrote to Four Corners regarding what he called a 'discount', and said it's his client's own business what they tell the bank.

So, in short, would you say that your company hasn't been involved in marketeering at all - what people call marketeering?

STEPHEN McDONELL: Despite our repeated attempts for an interview with Henry Kaye, he refused to come on to the program. Real estate is an industry flooded with new players and there's no shortage of Australians queuing up to get a piece of what's on offer. Queensland has introduced a new five-day cooling-off period, but we still have no national legislation.

TERRY RYDER: What we're lacking is the will of the regulators. I think the biggest problem in all of this is the lack of regulation by federal authorities in particular. These people are able to run amok and nobody takes action to stop them.

NEIL JENMAN: You don't need a licence to give real estate investment advice. If you want to buy one Telstra share and you recommend somebody buy one Telstra share, you've got to be licensed to do that. But you can recommend that somebody buy multiple blocks of apartments, you can recommend that somebody mortgage their home, throw away their entire assets, and you need nothing.

STEPHEN MCDONELL: So, people go on risking their life savings or equity in their family home on high-risk investment strategies.

EXPO WOMAN 2 (To expo attendee): The developer can call on the bond, the underwriter has to pay out the deposit bond to the developer, and then, basically, the underwriter, then goes, uh...follows the actual client and sues them to recover the money.

STEPHEN McDONELL: Maybe what the regulators are not doing, the market is about to sort out. As prices fall and people are stung, a bit of buyer-beware brutality could dull investor enthusiasm. Then again, some people just want to believe. And if they're listening, the message is still there. "If you do it right," they say, "real estate will still never let you down."

PAUL HANNA: People are looking for a better way of life. There's gotta be a better way. How do they get ahead? Um, a competitive edge to life, to making more money.

DANNY HANNA: I think property's one way.

PAUL HANNA: We're a little bit biased. We ARE a little bit biased. That's how we've done it. We've done it through property. Is it the only way and the best way? To us it is, but to other people it may not be.

DANNY HANNA: I'm sure Bill Gates has a different opinion. He'll tell you the best way is create some great software.